N-CSR 1 psgncsr.htm N-CSR Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-22657


PSG Capital Management Trust

(Exact Name of Registrant as Specified in Charter)


8161 Maple Lawn Boulevard, Suite 400

Maple Lawn, MD 20759

(Address of Principal Executive Offices)(Zip Code)


Paracorp Incorporated

2140 S. Dupont Highway

Camden, DE 19934

(Name and Address of Agent for Service)


With copy to:

JoAnn M. Strasser, Thompson Hine LLP

41 S. High Street, Suite 1700

 Columbus, OH 43215


Registrant’s Telephone Number, including Area Code:  (301) 543-6000


Date of fiscal year end: March 31


Date of reporting period: March 31, 2015


Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).  The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.


A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


Item 1.  Reports to Stockholders.








[psgtacticalannual315001.jpg]




PSG TACTICAL GROWTH FUND



ANNUAL REPORT



March 31, 2015
























PSG TACTICAL GROWTH FUND


MANAGER COMMENTARY

MARCH 31, 2015 (UNAUDITED)



Dear Shareholder:


As of the fiscal year ended, March 31, 2015, the PSG Tactical Growth Fund (the “Fund”) achieved a positive since inception return of 2.96% annualized (inception date May 1, 2012).  The Fund outperformed its benchmark, the HFRX Absolute Return Index (the “Index”), which had a positive return of 2.28% annualized during the period.  The Fund underperformed the Index during the last fiscal year, with a return of -1.02% vs. the Index’s return of 1.15%.


The underperformance during the fiscal year ended March 31, 2015 was primarily attributable to the Fund’s exposure to energy and international stocks.  During the second half of 2014 the price of oil fell close to 50% from its peak, and the average energy stock in the S&P 500 fell nearly 25%. In addition international stocks corrected over 10% from their peak in 2014 and finished the year down nearly 5% for the year.  Despite the apparent volatility in these sectors, and because we believe many stocks in these sectors to have been undervalued, we increased positions in existing and initiated positions in new energy and international holdings during the period.  We believe the valuations of these assets are attractive and are willing to absorb near term volatility and underperformance to generate long term positive performance.

 

BP Plc, one of the Fund’s largest energy holdings, maintains a strong balance sheet which we believe will help it weather the downturn.  In addition, the company has several business lines that also provide diversification within the holding.  It appears that its refining operations may actually benefit from the decline in oil prices.  The company stated in its most recent earnings conference call that maintaining its dividend is one of its highest priorities.  The stock also has also recently benefitted from speculation suggesting the company could be vulnerable to being acquired.  However, we believe that the U.K. government will fight any proposed takeover.


We established two new energy related positions during the sector correction.  PBF Energy, Inc. is a refiner and supplier of energy products.  Shares were acquired at an average cost of $25.54 and ended the quarter at $33.92.  SunEdison, Inc. is a company focused on the rapidly growing alternative energy solutions space.  Shares were acquired at an average price of $19.16 and ended the quarter at $24.00.  


We also increased the Fund’s exposure to equities of companies domiciled in Europe and Japan.  Despite a significant rally in 2013, Japan remains one of the cheapest developed countries in the world (both in comparison to other developed countries and relative to its history).  Abenomics has yielded several positive catalysts including an improved labor market, low interest rates, improving corporate governance and growing corporate profits.  The Bank of Japan has committed to quantitative easing which should continue to be a net positive for asset prices as more money moves from low yielding assets to riskier ones.  The Japanese equity market is up significantly year to date as of 3/31/2015.


Consistent with the Fund’s strategy, we will exit holdings when they reach what we consider full valuation.  Anthem Inc. (formerly WellPoint) is an example of that



PSG TACTICAL GROWTH FUND


MANAGER COMMENTARY (CONTINUED)

MARCH 31, 2015 (UNAUDITED)



approach.  We began purchasing the health benefits company in November 2012 at an average price of $56.47.  We believed the threats of increased regulation, taxation and headline risks from the Patient Protection and Affordable Care Act, also known as “Obamacare,” were unjustly depressing the company’s stock price.  As the market realized that Obamacare was not going to put health benefits companies out of business, its stock price recovered.  In addition, CEO Joe Swedish implemented a turnaround plan that fixed many historical issues that were holding back the share price.  We sold the Fund’s position in Anthem in January 2015 at approximately $130/share as we believe that most of the good news is now in the rear view mirror and that future catalysts for growth are limited.


Diversification continued to negatively impact performance over the past fiscal year.  Investors needed to be significantly overweight large cap U.S. equities to generate above average returns.  Many other asset classes that the Fund is invested in including international stocks, gold and precious metals were detractors from performance.  In addition, our hedging strategies negatively impacted performance.


Going forward, we continue to believe investors should reduce their expectations for returns from the stock market.  We will invest in securities we believe to be undervalued, while maintaining a disciplined approach to selling those that are no longer attractive given the Fund’s objective and strategy.  We also will use cash and other hedging strategies as needed in an attempt to protect against losses.  Thank you for your investment in PSG Tactical Growth Fund.


Sincerely,


Jonathan Giordani

Portfolio Manager




PSG TACTICAL GROWTH FUND


PERFORMANCE ILLUSTRATION

MARCH 31, 2015 (UNAUDITED)



 AVERAGE ANNUALIZED TOTAL RETURNS AS OF 3/31/2015


 

1 Year

Since Inception *

Ending Value

PSG Tactical Growth Fund

-1.02%

2.96%

$ 10,888

HFRX Absolute Return Index

1.15%

2.28%

$ 10,679


[psgtacticalannual315003.gif]



* Date of commencement of investment operations (May 1, 2012).


This chart assumes an initial investment of $10,000 made on 5/1/2012 (commencement of investment operations).  Total return is based on the net change in NAV and assumes reinvestment of all dividends and other distributions. Performance figures represent past performance which is not predictive of future performance.   Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost.


The HFRX Absolute Return Index is designed to be representative of the overall composition of the hedge fund universe. It is comprised of all eligible hedge fund strategies; including but not limited to convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. As a component of the optimization process, the index selects constituents which characteristically exhibit lower volatilities and lower correlations to standard directional benchmarks of equity market and hedge fund industry performance.


The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.


Current performance may be lower or higher than the performance data quoted.  To obtain performance data current to the most recent month end, please call (855)-866-9825.



PSG TACTICAL GROWTH FUND


GRAPHICAL ILLUSTRATION

MARCH 31, 2015 (UNAUDITED)



The following chart gives a visual breakdown of the Fund.  The underlying securities are represented as a percentage of the portfolio of investments.


[psgtacticalannual315005.gif]



Per the fee table in the August 1, 2014 prospectus, the Fund’s total annual operating expense ratio was 2.67%.


Sectors are categorized using Morningstar® classifications.


Portfolio composition is subject to change.  


Excludes securities sold short.



PSG TACTICAL GROWTH FUND


SCHEDULE OF INVESTMENTS

MARCH 31, 2015






 Shares/Principal

Value

 

 

 

 

COMMON STOCKS - 54.83%

 

 

 

 

 

Application Software - 0.55%

 

3,130

 

Oracle Corp.

$       135,059

 

 

 

 

Beverages - 0.67%

 

1,471

 

Diageo Plc. (United Kingdom)

162,648

 

 

 

 

Biological Products (No Diagnostic Substances) - 2.06%

 

3,132

 

Amgen, Inc.

500,650

 

 

 

 

Bituminous Coal & Lignite Surface Mining - 1.30%

 

11,366

 

CONSOL Energy, Inc.

316,998

 

 

 

 

Cable & Other Pay Television Services - 2.32%

 

19,382

 

SoftBank Corp. ADR

563,532

 

 

 

 

Crude Petroleum & Natural Gas - 1.90%

 

1,190

 

California Resources Corp.

9,056

16,176

 

Chesapeake Energy Corp.

229,052

4,508

 

Total SA ADR

223,867

 

 

 

461,975

Electronic Computers - 1.06%

 

2,081

 

Apple, Inc. (a)

258,939

 

 

 

 

Fire, Marine & Casualty Insurance - 6.48%

 

537

 

Alleghany Corp. *

261,519

10,981

 

American International Group, Inc. (a)

601,649

663

 

Fairfax Financial Holdings Ltd. (Canada) (a)

370,358

8,395

 

Loews Corp. (a)

342,768

 

 

 

1,576,294

Hospital & Medical Service Plans - 0.67%

 

1,524

 

Aetna, Inc.

162,352

 

 

 

 

Insurance Agents, Brokers & Services - 2.84%

 

1,832

 

Aon Plc. Class A (United Kingdom)

176,092

332

 

Markel Corp. (a) *

255,295

5,380

 

Willis Group Holdings Plc. (United Kingdom)

259,208

 

 

 

690,595

Lumber & Wood Products - 1.27%

 

13,837

 

Leucadia National Corp. (a)

308,427


* Represents non-income producing security.

(a) All or a portion of this security is held as collateral for securities sold short.

ADR - American Depositary Receipt

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


SCHEDULE OF INVESTMENTS (CONTINUED)

MARCH 31, 2015






 Shares/Principal

Value

 

 

 

 

Motor Vehicles & Passenger Car Bodies - 3.29%

 

14,831

 

General Motor Co. (a)

$         556,163

1,745

 

Toyota Motor Corp. ADR

244,108

 

 

 

800,271

National Commercial Banks - 2.33%

 

20,938

 

Bank of America Corp.

322,236

4,748

 

Citigroup, Inc.

244,617

 

 

 

566,853

Oil & Gas Field Machinery & Equipment - 1.01%

 

4,909

 

National Oilwell Varco, Inc.

245,401

 

 

 

 

Operators of Nonresidential Buildings - 0.93%

 

8,820

 

Forest City Enterprises, Inc. Class A *

225,086

 

 

 

 

Packaged Foods - 0.74%

 

2,382

 

Nestle ADR

179,175

 

 

 

 

Petroleum Refining - 4.57%

 

16,421

 

BP Plc. ADR (a)

642,225

13,853

 

PBF Energy, Inc.

469,894

 

 

 

1,112,119

Pharmaceutical Preparations - 5.10%

 

2,695

 

AstraZeneca Plc. ADR (a)

184,419

1,778

 

Novartis AG ADR

175,329

6,098

 

Sanofi ADR

301,485

2,924

 

Valeant Pharmaceuticals International, Inc. (Canada) *

580,765

 

 

 

1,241,998

Plastic Materials, Synthetic Resins & Nonvulcan Elastomers - 1.53%

 

7,779

 

The Dow Chemical Co.

373,236

 

 

 

 

Primary Smelting & Refining of Nonferrous Metals - 0.97%

 

18,676

 

Horsehead Holding Corp. *

236,438

 

 

 

 

Radio & TV Broadcasting & Communications Equipment - 0.70%

 

5,194

 

Vodafone Group Plc. ADR

169,740

 

 

 

 

Retail-Auto  Dealers & Gasoline Stations - 0.73%

 

2,566

 

CarMax, Inc. *

177,080

 

 

 

 

Retail-Family Clothing Stores - 0.55%

 

1,911

 

The TJX Companies, Inc.

133,866


* Represents non-income producing security.

(a) All or a portion of this security is held as collateral for securities sold short.

ADR - American Depositary Receipt

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


SCHEDULE OF INVESTMENTS (CONTINUED)

MARCH 31, 2015






 Shares/Principal

Value

 

 

 

 

Retail-Variety Stores - 1.16%

 

3,480

 

Dollar Tree, Inc. *

$         282,385

 

 

 

 

Security Brokers, Dealers & Flotation Companies - 1.42%

 

12,785

 

Credit Suisse Group AG ADR

344,300

 

 

 

 

Semiconductors & Related Devices - 3.13%

 

16,983

 

Micron Technology, Inc. *

460,749

12,489

 

SunEdison, Inc. *

299,736

 

 

 

760,485

Services-Business Services - 2.17%

 

4,291

 

eBay, Inc. *

247,505

13,503

 

The Western Union Co.

280,997

 

 

 

528,502

Services-Computer Programming, Data Processing, Etc. - 0.97%

 

430

 

Google, Inc. Class C *

235,640

 

 

 

 

Services-Miscellaneous Health & Allied Services - 1.62%

 

4,851

 

DaVita Healthcare Partners, Inc. *

394,289

 

 

 

 

Wholesale-Groceries & Related Products - 0.79%

 

5,070

 

Sysco Corp. (a)

191,291

 

 

 

 

TOTAL COMMON STOCKS (Cost $11,656,338) - 54.83%

13,335,624

 

 

 

 

CLOSED-END MUTUAL FUNDS - 11.83%

 

16,666

 

BlackRock MuniAssets Fund, Inc.

234,324

6,445

 

BlackRock MuniYield Fund, Inc.

97,835

5,300

 

BlackRock Virginia Municipal Bond Trust

94,499

4,930

 

ClearBridge Energy MLP Opportunity Fund, Inc.

103,333

16,084

 

DSW Municipal Income Trust

225,337

8,293

 

Eaton Vance Floating Rate Income Trust

120,995

13,362

 

John Hancock Preferred Income Fund II

280,602

6,511

 

Nuveen Dividend Advantage Municipal Fund

93,238

16,872

 

Nuveen Dividend Advantage Municipal Income Fund

244,813

16,412

 

Nuveen Municipal Advantage Fund, Inc.

225,829

15,549

 

Nuveen Quality Income Municipal Fund, Inc.

218,308

9,685

 

PIMCO Corporate Opportunity Fund

152,732

8,302

 

PIMCO Dynamic Credit Income Fund

169,527

6,283

 

PIMCO Dynamic Income Fund

182,207


* Represents non-income producing security.

(a) All or a portion of this security is held as collateral for securities sold short.

ADR - American Depositary Receipt

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


SCHEDULE OF INVESTMENTS (CONTINUED)

MARCH 31, 2015






 Shares/Principal

Value

 

 

CLOSED-END MUTUAL FUNDS - (Continued)

 

5,700

 

PIMCO Income Opportunity Fund

$         145,635

12,865

 

PIMCO Income Strategy Fund II

129,164

22,350

 

Templeton Global Income Fund, Inc.

160,696

TOTAL CLOSED-END MUTUAL FUNDS (Cost $2,836,823) - 11.83%

      2,879,074

 

 

 

 

CORPORATE BONDS - 1.77%

 

50,000

 

Clear Channel Communications, Inc. 9.00%, 03/01/21

47,875

50,000

 

Clear Channel Communications, Inc. 9.00%, 12/15/19

49,500

70,000

 

First Data Corp. 12.625%, 01/15/21

82,950

274,000

 

Sprint Capital Corp. 6.875%, 11/15/28

251,395

TOTAL CORPORATE BONDS (Cost $428,974) - 1.77%

         431,720

 

 

 

 

EXCHANGE TRADED FUNDS - 8.72%

 

8,173

 

iShares MSCI Germany

243,882

30,006

 

iShares MSCI Japan Index

375,975

4,237

 

iShares MSCI South Korea Capped

242,526

2,843

 

ProShares UltraShort QQQ *

104,793

4,550

 

ProShares UltraShort S&P500 *

97,051

5,804

 

SPDR Gold Shares *

659,683

7,235

 

WisdomTree Japan Hedged Equity ETF

398,793

TOTAL EXCHANGE TRADED FUNDS (Cost $2,229,224) - 8.72%

      2,122,703

 

 

 

 

PREFERRED STOCKS - 6.83%

 

4,535

 

Ally Financial PFD, Series A, 8.50%, Perpetual 5/15/16

120,948

11,941

 

American Realty Capital Properties, Inc., Series F, 6.70%, 12/31/49

281,808

4,710

 

BB&T Corp., Series E, 5.625%, 12/31/49

119,116

2,000

 

Citigroup Cap XIII 7.875%, 10/30/40

53,040

4,338

 

First Horizon National Corp. PFD, Series A, 6.20%, Perpetual 4/10/18

108,233

3,730

 

ING Group NV 7.05%, 12/31/49

95,861

3,167

 

JP Morgan Chase Capital XXIX 6.70%, 04/02/40

80,505

4,507

 

Kimco Realty Corp., Series I, 6.00% 12/31/49

116,731

6,234

 

Metlife, Inc., Series B, 6.50%, Perpetual 6/22/15 (a)

161,523

6,544

 

Public Storage, Series W, 5.20%, Perpetual 1/16/18

158,496

2,900

 

Qwest Corp. NT 7.375%, 6/01/51

76,212

4,136

 

United States Cellular Corp. 6.95%, 5/15/60

105,013

61

 

Wells Fargo & Co. PFD, Series L, 7.50%, Perpetual 12/31/49

74,420

4,219

 

Zions Bancorp PFD, Series G,  6.30%, Perpetual 3/15/23

110,200

TOTAL PREFERRED STOCKS (Cost $1,619,805) - 6.83%

      1,662,106





* Represents non-income producing security.

(a) All or a portion of this security is held as collateral for securities sold short.

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


SCHEDULE OF INVESTMENTS (CONTINUED)

MARCH 31, 2015






 Shares/Principal

Value

 

 

 

 

REAL ESTATE INVESTMENT TRUSTS - 4.55%

 

11,130

 

American Capital Agency Corp.

$         237,403

46,783

 

American Realty Capital Properties, Inc.

460,813

2,542

 

American Tower Corp.

239,329

16,293

 

Annaly Capital Management, Inc. (a)

169,447

TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $1,212,773) - 4.55%

      1,106,992

 

 

 

 

SHORT-TERM INVESTMENT - 11.73%

 

2,854,364

 

Fidelity Institutional Treasury Only Money Market Class I 0.01% **

2,854,364

TOTAL SHORT-TERM INVESTMENT (Cost $2,854,364) - 11.73%

      2,854,364

 

 

 

 

TOTAL INVESTMENTS IN SECURITIES (Cost $22,838,301) - 100.26%

$   24,392,583

 

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS - (0.26)%

(62,472)

 

 

 

 

NET ASSETS - 100.00%

$   24,330,111











As of March 31, 2015, the diversification of countries was as follows:

 

 

 

 

 

 


Country

Percentage of

Net Assets

 

 

 

 

 

 

Canada

3.91%

 

 

France

2.16%

 

 

Japan

3.32%

 

 

Netherlands

0.39%

 

 

Switzerland

2.88%

 

 

United Kingdom

6.56%

 

 

United States

81.04%

 

 

 

100.26%




(a) All or a portion of this security is held as collateral for securities sold short.

** Variable Rate Security, the coupon rate shown represents the annualized yield that was in effect at March 31, 2015.

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


SCHEDULE OF SECURITIES SOLD SHORT

MARCH 31, 2015




Shares

 

 

Value

 

 

 

 

COMMON STOCK

 

 

 

 

 

Services-Business Services

 

1,277

 

Athenahealth, Inc. *

$     152,461

 

 

 

 

Services-Computer Programming, Data Processing, Etc.

 

591

 

Baidu, Inc. ADR *

123,164

 

 

 

 

TOTAL COMMON STOCK (Proceeds $289,109)

275,625

 

 

 

 

 

 

 

 

EXCHANGE TRADED FUNDS

 

1,321

 

iShares MSCI Emerging Markets Index

53,012

3,576

 

iShares Russell 2000 Index

444,747

1,190

 

PowerShares QQQ

125,664

524

 

ProShares Ultra QQQ

74,696

1,718

 

ProShares Ultra S&P 500

222,137

4,928

 

SPDR S&P 500

1,017,287

TOTAL EXCHANGE TRADED FUNDS (Proceeds $1,718,707)

1,937,543

 

 

 

 

TOTAL SECURITIES SOLD SHORT (Proceeds $2,007,816)

$   2,213,168






* Represents non-income producing security.

ADR - American Depositary Receipt

The accompanying notes are an integral part of these financial statements.




PSG TACTICAL GROWTH FUND


STATEMENT OF ASSETS AND LIABILITIES

MARCH 31, 2015






Assets:

 

 

    Investments in Securities, at Value (Cost $22,838,301)

$ 24,392,583

    Cash

 

8,605

    Cash with Broker for Securities Sold Short

1,879,299

    Receivables:

 

        Dividends and Interest

         57,074

        Portfolio Securities Sold

       245,609

        Shareholder Purchases

         17,023

    Prepaid Expenses

           2,979

            Total Assets

   26,603,172

Liabilities:

 

 

    Securities Sold Short, at Value (Proceeds $2,007,816)

2,213,168

    Payables:

 

 

        Advisory Fees

33,951

        Dividend Expense on Short Positions

2,589

        Accrued Expenses

         23,353

            Total Liabilities

     2,273,061

Net Assets

 

$ 24,330,111

 

 

 

Net Assets Consist of:

 

    Paid In Capital

$ 23,135,586

    Undistributed Net Investment Income

8,593

    Accumulated Realized Loss on Investments

(162,998)

    Unrealized Appreciation in Value of Investments

     1,348,930

Net Assets

 

$ 24,330,111

 

 

 

Shares Outstanding (Unlimited shares authorized with no par value)

2,264,541

 

 

 

Net Asset Value, Offering and Redemption Price Per Share

$          10.74







The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


STATEMENT OF OPERATIONS

       FOR THE YEAR ENDED MARCH 31, 2015






Investment Income:

 

 

       Dividends (net of foreign withholding taxes of $7,186)

$       588,050

       Interest

 

           46,722

            Total Investment Income

         634,772

 

 

 

Expenses:

 

 

       Advisory Fees (Note 4)

         290,237

       Transfer Agent & Accounting Fees

           31,584

       Distribution (12b-1) Fees (Note 4)

           33,831

       Registration Fees

            6,203

       Audit Fees

 

           15,498

       Insurance Fees

 

            7,795

       Miscellaneous Fees

            4,242

       Custodial Fees

 

            7,238

       Legal Fees

 

           19,694

       Trustee Fees (Note 4)

            8,231

       Printing and Mailing

            1,634

       Interest Expense

           54,348

       Dividend Expense

           22,827

            Total Expenses

 

         503,362

                 Fees Recouped by the Advisor (Note 4)

            8,252

            Net Expenses

         511,614

 

 

 

Net Investment Income

         123,158

 

 

 

Realized Gain/(Loss) on:

 

       Investments in Securities

         607,952

       Investments in Options

        (26,627)

       Options Written

 

            6,327

       Securities Sold Short

      (510,401)

       Capital Gain Distributions from Investment Companies

           11,150

            Net Realized Gain on Investments

           88,401

 

 

 

Change in Unrealized Appreciation/(Depreciation) on:

 

       Investments in Securities

      (756,884)

       Options Written

 

           11,291

       Securities Sold Short

         276,658

            Net Change in Unrealized Depreciation

      (468,935)

 

 

 

Net Realized and Unrealized Loss on Investments

      (380,534)

 

 

 

Net Decrease in Net Assets Resulting from Operations

 $    (257,376)




The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


STATEMENTS OF CHANGES IN NET ASSETS



 

 

    Years Ended

 

 

3/31/2015

3/31/2014

Increase (Decrease) in Net Assets From Operations:

 

 

    Net Investment Income

$     123,158

$      213,337

    Net Realized Gain on Investments

         88,401

          30,932

    Net Change in Unrealized Appreciation (Depreciation) on Investments

    (468,935)

     1,130,714

Net Increase (Decrease) in Net Assets Resulting from Operations

    (257,376)

     1,374,983

 

 

 

 

Distributions to Shareholders From:

 

 

    Net Investment Income

    (317,553)

                   -

    Net Realized Gains

        (2,025)

                   -

    Total Distributions

    (319,578)

                   -

 

 

 

 

Capital Share Transactions (Note 5)

    3,730,801

     2,901,531

 

 

 

 

Total Increase in Net Assets

    3,153,847

     4,276,514

 

 

 

 

Net Assets:

 

 

 

Beginning of Year

  21,176,264

   16,899,750

 

 

 

 

End of Year (including undistributed net investment income of

$24,330,111

$ 21,176,264

      $8,593 and $201,455, respectively).






 

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


FINANCIAL HIGHLIGHTS

Selected data for a share outstanding throughout the period.






 

 

Years Ended

 

Period Ended (a)

 

 

3/31/2015

3/31/2014

 

3/31/2013

 

 

 

 

 

 

Net Asset Value, at Beginning of Period

$     11.00

$     10.22

 

$     10.00

 

 

 

 

 

 

Income From Investment Operations:

 

 

 

 

  Net Investment Income (Loss) *

         0.06

         0.12

 

      (0.05)

  Net Realized and Unrealized Gain (Loss) on Investments

       (0.18)

         0.66

 

         0.27

     Total from Investment Operations

       (0.12)

         0.78

 

         0.22

 

 

 

 

 

 

Distributions from:

 

 

 

 

  Net Investment Income

       (0.14)

              -

 

              -

  Net Realized Gains

            - †

              -

 

              -

     Total Distributions

       (0.14)

              -

 

              -

 

 

 

 

 

 

Redemption Fees

              -

              -

 

           - †

 

 

 

 

 

 

Net Asset Value, at End of Period

$     10.74

$     11.00

 

$     10.22

 

 

 

 

 

 

Total Return **

   (1.02)%

7.63%

 

2.20% (b)

 

 

 

 

 

 

Ratios/Supplemental Data:

 

 

 

 

  Net Assets at End of Period (Thousands)

$   24,330

$   21,176

 

$   16,900

  Before Waiver/Recoupment

 

 

 

 

    Ratio of Expenses to Average Net Assets

2.17%

2.46%

 

2.28% (c)

    Ratio of Expenses to Average Net Assets, Excluding

           Interest and Dividends on Securities Sold Short

1.84%

1.95%

 

2.14% (c)

    Ratio of Dividend Expense and Interest Expense on

           Securities Sold Short to Average Net Assets

0.33%

0.51%

 

0.14% (c)

    Ratio of Net Investment Income (Loss) to Average Net Assets

0.57%

1.22%

 

(0.74)% (c)

  After Waiver/Recoupment

 

 

 

 

    Ratio of Expenses to Average Net Assets

2.20%

2.51%

 

2.14% (c)

    Ratio of Expenses to Average Net Assets, Excluding

           Interest and Dividends on Securities Sold Short

1.87%

2.00%

 

2.00% (c)

    Ratio of Net Investment Income (Loss) to Average Net Assets

0.54%

1.17%

 

(0.60)% (c)

  Portfolio Turnover

93.36%

52.58%

 

41.58% (b)




(a) For the period May 1, 2012 (commencement of investment operations) through March 31, 2013.

(b) Not Annualized

(c) Annualized

* Per share net investment income (loss) has been determined on the basis of average shares method.

** Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of all Fund distributions, if any.

† Amount calculated is less than $0.005.

The accompanying notes are an integral part of these financial statements.



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2015



NOTE 1. ORGANIZATION


The PSG Capital Management Trust (the “Trust”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended, and organized on December 21, 2011, as a Delaware Statutory Trust.  The Trust currently consists of one series of units of beneficial interest (“shares”), the PSG Tactical Growth Fund (the “Fund”).  The Board of Trustees may classify and reclassify the shares of the Fund into one or more classes of shares at a future date.  The Fund is a non-diversified fund. The investment advisor to the Fund is PSG Investment Advisors, LLC (the "Advisor").


The Fund seeks total return from income and capital appreciation with an emphasis on absolute return.


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the U.S. (“GAAP”).


CASH: The Fund maintains its cash in an account at its custodian bank which, at times, may exceed federally insured limits. The Fund has not experienced any losses in such account and believes it is not exposed to any significant credit risk on its cash deposits. A portion of cash is segregated as collateral for securities sold short and is included in "Cash with Broker for Securities Sold Short" on the Statement of Assets and Liabilities.


SECURITY VALUATION: The Fund’s securities are valued at current market prices.  Investments in securities traded on a principal exchange (U. S. or foreign) and on the NASDAQ National Market System are generally valued by the pricing service at the last quoted sale price on the exchange on which the securities are traded as of the close of business on the day the securities are being valued. Lacking any sales, investments are generally valued by the pricing service at their last bid price.  Securities for which market values are not readily available, or for which the Advisor believes the market value is unreliable (including, for example, certain foreign securities, thinly-traded securities, or when there is a particular event that may affect the value of a security), such securities are valued as determined in good faith by the Advisor at their fair values pursuant to guidelines established by the Board of Trustees, and under the ultimate oversight of the Board of Trustees.  Short-term fixed income securities with remaining maturities of 60 days or less and of sufficient credit quality, are valued at amortized cost.


For options and futures contracts, under normal circumstances, closing bid and ask option quotations are considered to be reflective of the option contract values as of the close of the regular session of trading on the New York Stock Exchange (the “stock market close”), and will be used to determine fair value of the contracts.  Options and futures contracts listed for trading on a securities exchange (whether domestic or foreign and, for



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



purposes of these procedures, including the NASDAQ) or board of trade for which market quotations are readily available shall be valued:

(i)

at the last quoted sales price or, in the absence of a sale

(ii)

at the mean of the last bid and asked prices.


In accordance with the Trust’s good faith pricing guidelines, the Advisor is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. There is no single standard for determining fair value, since fair value depends upon the circumstances of each individual case.  As a general principle, the current fair value of securities being valued by the Advisor would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale.  Methods which are in accord with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods.


SHARE VALUATION:  The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (the “NYSE”) (generally 4:00 p.m. Eastern time) on each day the NYSE is open. The NAV is determined by totaling the value of all portfolio securities, cash and other assets held by the Fund, and subtracting from that total all liabilities, including accrued expenses.  The total NAV is divided by the total number of shares outstanding to determine the NAV of each share.


SECURITY TRANSACTIONS: Investment transactions are accounted for on the trade date. Dividend income and distributions to shareholders are recognized on the ex-dividend date.  Non cash dividend income is recorded at the fair market value of securities received. Interest income is recognized on an accrual basis.  The Fund uses the specific identification method in computing gain or loss on sale of investment securities.  Discounts and premiums on securities purchased are accreted and amortized over the life of the respective securities.


SHORT SALES: The Fund may sell a security it does not own in anticipation of a decline in the fair value of that security. When the Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale. The Fund is liable for any dividends or interest payable on securities while those securities are in a short position. Such amounts are recorded on the ex-dividend date as a dividend expense.


OPTION WRITING: When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.


FEDERAL INCOME TAXES: The Fund's policy is to continue to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its taxable income to shareholders.  Therefore, no federal income tax provision is required.  It is the Fund’s policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Code.  This Internal Revenue Code requirement may cause an excess of distributions over the book year-end accumulated income.  In addition, it is the Fund’s policy to distribute annually, after the end of the fiscal year, any remaining net investment income and net realized capital gains.


The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded, related to uncertain tax positions taken in open tax years (2013 - 2014) or expected to be taken in the Fund’s 2015 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal and certain State tax authorities; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.


The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended March 31, 2015, the Fund did not incur any interest or penalties.


DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to distribute to its shareholders substantially all of its net realized capital gains and net investment income, if any, at year-end. Distributions will be recorded on ex-dividend date.  Distributions to shareholders, are determined in accordance with income tax regulations. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income taxes purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes.  Any such reclassifications will have no effect on net assets, results of operations or net asset value per share of the Fund.



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



USE OF ESTIMATES: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.  Actual results could differ from those estimates.


NOTE 3. SECURITY VALUATIONS


In accordance with GAAP, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date.  GAAP also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. The three-tier hierarchy of inputs is summarized below.


 

Level 1 – quoted prices in active markets for identical investments

 

Level 2 – other significant observable inputs, including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.

 

Level 3 – significant unobservable inputs, including the Fund’s own assumptions in determining the fair value of investments


The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.


The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of March 31, 2015:


Investments in Securities

Level 1

Level 2

Level 3

Total

  (Assets)

 

 

 

 

    Common Stocks

$13,335,624

$              -

 $              -

$  13,335,624

    Closed-End Mutual Funds

2,879,074

             -

             -

2,879,074

    Corporate Bonds

                -

431,720

             -

431,720

    Exchange Traded Funds

2,122,703

 -

             -

2,122,703

    Preferred Stock

1,662,106

             -

             -

1,662,106

    Real Estate Investment Trust

1,106,992

             -

             -

1,106,992

    Short-Term Investments

2,854,364

             -

             -

2,854,364

            Total

$23,960,863

$   431,720

 $              -

$  24,392,583


Investments in Securities Sold Short

Level 1

Level 2

Level 3

Total

  (Liabilities)

 

 

 

 

    Common Stock

$   (275,625)

 $              -

 $              -

$    (275,625)

    Exchange Traded Funds

(1,937,543)

-

-

(1,937,543)

            Total

$(2,213,168)

 $              -

 $              -

$ (2,213,168)


Refer to the Fund’s Schedule of Investments for a listing of securities by security type and industry.  



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



The Fund did not hold any Level 3 assets during the year ended March 31, 2015. There were no significant transfers into or out of Level 1 and 2 during the period. It is the Fund’s policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period.


NOTE 4. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES


INVESTMENT ADVISOR: the Advisor serves as investment advisor to the Fund.  Subject to the authority of the Board, the Advisor is responsible for management of the Fund's investment portfolio.  The Advisor is responsible for selecting the Fund's investments according to the Fund's investment objective, policies and restrictions and as compensation for its management services, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly in arrears at an annual rate of 1.25% of the average daily net assets of the Fund during the term of the Agreement. For the year ended March 31, 2015, the Fund incurred advisory fees of $290,237.  As of March 31, 2015, the Fund owed the Advisor $33,951, of which $8,252 consisted of expense recaptures as described below and $25,699 consisted of accrued but unpaid investment advisory fees.


The Advisor has contractually agreed to waive management fees and/or reimburse expenses to limit Fund expenses, until July 31, 2016, so that the total annual operating expenses (exclusive of any taxes, borrowing costs (such as interest and dividend expenses on securities sold short), brokerage fees and commissions, indirect expenses such as expenses of other investment companies in which the Fund may invest, or extraordinary expenses such as litigation or expenses in connection with a merger or reorganization) of the Fund do not exceed 2.00% of average daily net assets.  These fee waivers and expense reimbursements are subject to possible recoupment from the Fund in future years on a rolling three-year basis (within the three years after the fees have been waived or reimbursed) if such recoupment can be achieved within the foregoing expense limit.  This agreement may be terminated only by the Board of Trustees, on 60 days written notice to the Advisor. During the year ended March 31, 2015, the Advisor has recouped $8,252 in previously waived advisory fees. As of March 31, 2015, there were no fee waivers or expense reimbursements that could potentially be recouped in future periods.


UNDERWRITER FEES: Arbor Court Capital, LLC (the "Underwriter") acts as the Fund's principal underwriter in a continuous offering of the Fund's shares. The Underwriter is an affiliate of MSS.


TRUSTEE FEES: The Fund pays a total annual fee of $4,000 to each Trustee who is not affiliated with the Trust or Advisor.


DISTRIBUTION FEES: The Fund has adopted a Rule 12b-1 plan (the "Plan") which allows it to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders.  The maximum level of distribution expenses is 0.25% per year of the Fund’s average net assets.




PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



Under the Plan, the Trust may engage in any activities related to the distribution of Fund shares, including without limitation the following: (a) payments, including incentive compensation, to securities dealers or other financial intermediaries, financial institutions, investment advisers and others that are engaged in the sale of shares of the Fund, or that may be advising shareholders of the Trust regarding the purchase, sale or retention of shares of the Fund; (b) expenses of maintaining personnel (including personnel of organizations with which the Trust has entered into agreements related to this Plan) who engage in or support distribution of shares of the Fund; (c) costs of preparing, printing and distributing prospectuses and statements of additional information and reports of the Fund for recipients other than existing shareholders of the Fund; (d) costs of formulating and implementing marketing and promotional activities, including, but not limited to, sales seminars, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (e) costs of preparing, printing and distributing sales literature; (f) costs of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Trust may, from time to time, deem advisable; and (g) costs of implementing and operating this Plan.


The Plan has been approved by the Trust's Board of Trustees, including a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the Plan or any related agreement, by a vote cast in person. Continuation of the Plan and the related agreements must be approved by the Trustees annually, in the same manner, and the Plan or any related agreement may be terminated at any time without penalty by a majority of such independent Trustees or by a majority of the outstanding shares of the Fund.  Any amendment increasing the maximum percentage payable under the Plan or other material change must be approved by a majority of the outstanding shares of the Fund, and all other material amendments to the Plan or any related agreement must be approved by a majority of the Independent Trustees. For the year ended March 31, 2015, the Fund incurred distribution fees of $33,831.  As of March 31, 2015, there were no distribution fees accrued that remain available for payment for authorized activities under the Plan.


NOTE 5. BENEFICIAL INTEREST TRANSACTIONS


The Trust is authorized to issue an unlimited number of shares of beneficial interest.


Transactions in shares of beneficial interest were as follows:


 

For the Year Ended

March 31, 2015

For the Year Ended

March 31, 2014

 

Shares

Capital

Shares

Capital

Shares sold

527,149

$   5,762,209

550,735

$   5,804,609

Shares reinvested

25,297

265,878

-

-

Shares redeemed

  (213,556)

  (2,297,286)

  (278,226)

  (2,903,078)

Net Increase

     338,890

$   3,730,801

     272,509     

$   2,901,531





PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



NOTE 6. OPTIONS


Transactions in written options during the year ended March 31, 2015, were as follows:


 

Number of

 

Premiums

 

Contracts

 

Received

Options outstanding at March 31, 2014

171

 

$      14,556

Options written

14

 

1,255

Options exercised

(35)

 

(2,384)

Options expired

(101)

 

(10,399)

Options terminated in closing purchase transaction

         (49)

 

       (3,028)

Options outstanding at March 31, 2015

               -               

 

$               -


Transactions in purchased options during the year ended March 31, 2015, were as follows:


 

Number of

 

Premiums

 

Contracts

 

Paid

Options outstanding at March 31, 2014

-

 

$                -

Options purchased

890

 

144,335

Options exercised

-

 

-

Options expired

-

 

-

Options terminated in closing sale transaction

       (890)

 

   (144,335)

Options outstanding at March 31, 2015

               -

 

$                -


All derivatives held during the year contained equity risk exposure. The location on the statement of assets and liabilities of the Fund’s derivative positions, which are not accounted for as hedging instruments under GAAP, is as follows:


Financial Investment Type

Location

Value

 

 

 

Options Written

Options Written, at value

$         -


Realized and unrealized gains and losses on derivatives contracts entered into during the year ended March 31, 2015, by the Fund are recorded in the following locations in the Statement of Operations:


Financial Investment Type

Location

Realized Gain/(Loss)

Location

Unrealized Gain


Investments In Options

Realized Loss on Investments in Options

$(26,627)

Change in Unrealized Appreciation on Investments in Options

$         -

Options Written

Realized Gain on Options Written

$    6,327

Change in Unrealized Appreciation on Options Written

$11,291


There were no options outstanding as of March 31, 2015, the option tables above serve as indicators of the volume of option activity.



PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



NOTE 7. INVESTMENT TRANSACTIONS


For the year ended March 31, 2015, purchases and sales of investment securities other than U.S. Government obligations, short-term investments, options, and securities sold short aggregated $22,619,495 and $18,225,797, respectively. Purchases and sales of Corporate Bonds aggregated $49,825 and $132,018, respectively. Purchases and sales of U.S. Government obligations aggregated $0 and $163,913, respectively. Purchases and sales of securities sold short aggregated $7,112,369 and $6,303,367, respectively.


NOTE 8. COMMITMENTS AND CONTINGENCIES


The Fund indemnifies the Trust’s officers and trustees for certain liabilities that might arise from the performance of their duties to the Fund.  Additionally, in the normal course of business, the Fund enters into contracts that contain various representations and warranties and provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on future claims against the Fund and is presently unknown.  However, the Fund considers the risk of loss from such potential claims to be remote.


NOTE 9. TAX MATTERS


At March 31, 2015, the cost of investments for federal income tax purposes was $20,826,668 and the aggregate gross unrealized appreciation and depreciation based on that cost was:


Unrealized appreciation

$  2,682,721

Unrealized depreciation

 (1,329,974)

Net unrealized appreciation

$  1,352,747


On December 22, 2014, the Fund declared an income distribution of $0.1442 per share, and a long term capital gain distribution of $0.00092.  The distribution was paid on December 22, 2014 to shareholders of record on December 19, 2014.  The tax character of the $319,578 paid was $317,570 ordinary income and $2,008 realized gain.


For the year ended March 31, 2014, there were no distributions paid.


As of March 31, 2015 the components of distributable earnings on a tax basis were as follows:


Undistributed Net Investment Income

$        5,216

Accumulated Net Realized Loss

(93,417)

Net Unrealized Appreciation of Investments

1,352,747

Other Book/Tax Differences

   (70,021)

          Total

$ 1,194,525




PSG TACTICAL GROWTH FUND


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

MARCH 31, 2015



The difference between book and tax basis unrealized appreciation is attributable primarily due to income/loss flow through from grantor trusts.  The Fund elects to defer to its fiscal year ending March 31, 2016, $70,021 of capital losses recognized during the period from November 1, 2014 to March 31, 2015.


Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. However, management's conclusion may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years (2012-2014) remain subject to examination by the Internal Revenue Service.


For the year ended March 31, 2015, the Fund recorded the following reclassification to the accounts listed below.  The reclassifications were primarily as a result of the differing book/tax treatment of certain investments and expenses.


Increase Undistributed Net Investment Income

 

Increase Accumulated Net Realized Loss

 

 

 

$ 1,533

 

($1,533)


NOTE 10. CONTROL AND OWNERSHIP


The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940, as amended. As of March 31, 2015, National Financial Services, LLC, in omnibus accounts, in aggregate, owned approximately 99.19% of the Fund and may be deemed to control the Fund by virtue of its authority over Fund shares.


NOTE 11. SUBSEQUENT EVENTS


The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statement of Assets and Liabilities. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.









[psgtacticalannual315006.jpg]


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Trustees of PSG Capital Management Trust

and the Shareholders of PSG Tactical Growth Fund

 

 

We have audited the accompanying statement of assets and liabilities of the PSG Tactical Growth Fund, including the schedule of investments, as of March 31, 2015, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the two-year period then ended and for the period May 1, 2012 (commencement of operations) to March 31, 2013.  These financial statements and financial highlights are the responsibility of the Fund's management.  Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.  

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  Our procedures included confirmation of securities owned as of March 31, 2015 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the PSG Tactical Growth Fund as of March 31, 2015, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and its financial highlights for each of the years in the two-year period then ended and for the period May 1, 2012 to March 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

[psgtacticalannual315007.jpg]

      BBD, LLP


Philadelphia, Pennsylvania

May 28, 2015





PSG TACTICAL GROWTH FUND


EXPENSE ILLUSTRATION

MARCH 31, 2015 (UNAUDITED)



Expense Example


 As a shareholder of the PSG Tactical Growth Fund (the "Fund"), you incur ongoing costs which typically consist of management fees, distribution (12b-1) fees, and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.


The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, October 1, 2014 through March 31, 2015.


Actual Expenses


The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.


Hypothetical Example for Comparison Purposes


The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.


 

Beginning

Account Value

Ending

Account Value

Expenses Paid During the Period*

 

October 1, 2014

March 31, 2015

October 1, 2014 to March 31, 2015

 

 

 

 

Actual

$1,000.00

$996.18

$9.90

Hypothetical

 

 

 

 (5% Annual Return before expenses)

$1,000.00

$1,015.01

$10.00

 

 

 

 

* Expenses are equal to the Fund's annualized expense ratio of 1.99%, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).



PSG TACTICAL GROWTH FUND


TRUSTEES & OFFICERS

MARCH 31, 2015 (UNAUDITED)



 Interested Trustees and Officers

Name, Address and Year of Birth

Position/Term of Office

Principal Occupation

During the Past 5 Years

Number of Portfolios in Fund Complex*

Overseen by Trustee

Other Directorships held by Trustee During Past 5 Years

Robert H. Carson**

1965

Trustee and President  since December 2011, indefinite term

Managing Partner, Planning Solutions Group, LLC (9/01-present); Managing Partner, PSG Companies, LLC (11/10-present); Managing Partner, PSG Family Office, LLC (11/10-present); President and CEO, PSG Investment Advisors, LLC (12/11-present)

1

none

Jonathan V. Giordani**

1974

Trustee and Treasurer since March 2012, indefinite term

Chief Investment Officer, Planning Solutions Group, LLC (12/05-present); Chief Investment Officer, PSG Investment Advisors, LLC (12/11-present)

1

none

Lauren G. Gretchen

1973

Chief Compliance Officer and Secretary since December 2011, indefinite term

CCO, PSG, LLC (3/11-present); Chief Compliance Officer, PSG Investment Advisors, LLC (12/11-present); Licensing, Morningstar (7/10-2/11); Financial Advisor, Mass Mutual (12/07-6/10)

n/a

n/a


Independent Trustees


Name, Address and Year of Birth

Position/Term of Office

Principal Occupation

During the Past Five Years

Number of Portfolios in Fund Complex*

Overseen by Trustee

Other Directorships held by Trustee During Past 5 Years

Meredith M. Haussler

1964

Trustee since March 2012, indefinite term

Accountant, Haussler & Associates, LLC (1/01-present)

1

none

Paul R. Lucas

1969

Trustee Since March 2012, indefinite term

Physician – Vascular Surgeon (7/02-present)

1

none


* The term "Fund Complex" refers to the PSG Capital Management Trust.


** Mr. Carson and Mr. Giordani are each an “interested person” of the Trust as that term is defined under the 1940 Act, because of his affiliation with the Fund's Advisor.


Additional information about the Trustees is available in the Fund’s Statement of Additional Information which is available free of charge by calling the Fund at 1-855-866-9825.



PSG TACTICAL GROWTH FUND


ADDITIONAL INFORMATION

MARCH 31, 2015 (UNAUDITED)



Portfolio Holdings – The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q.  The Fund’s first and third fiscal quarters end on June 30 and December 31. The Form N-Q filing must be made within 60 days of the end of the quarter. The Fund’s Forms N-Q are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).  You may also obtain copies by calling the Fund at 1-855-866-9825, free of charge.  

 

Proxy Voting - A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies during the 12-month period ended June 30, are available without charge upon request by (1) calling the Fund at 1-855-866-9825 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.  A review of how the Fund voted on company proxies can be obtained at our transfer agent’s website, www.mutualss.com.  


Statement of Additional Information - The Fund's Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request.  You may call toll-free at 1-855-866-9825 to request a copy of the SAI or to make shareholder inquiries.


Advisory Renewal Agreement - In connection with a regular meeting of the Board of Trustees (the “Board” or the “Trustees”) of the PSG Capital Management Trust (the “Trust”) held on February 26, 2015, the Trustees considered the renewal of the investment advisory agreement between PSG Investment Advisors, LLC (the “Advisor”) and the Trust (the “Management Agreement”), with respect to the PSG Tactical Growth Fund (the “Fund”).  In connection with their consideration of the renewal of the Management Agreement, the Trustees received materials from the Advisor specifically relating to the Management Agreement.    


Nature, Extent, and Quality of Services. The Trustees reviewed the organizational structure of the Advisor and the key personnel responsible for servicing the Fund and noted that there had been no changes to the investment team.  The Trustees then reviewed the Advisor’s  investment philosophy, portfolio construction process, and assets under management.  The Trustees reviewed the Advisor’s experience and the capabilities of its personnel, and noted positively the quality of the reports and other materials provided to the Board by the Advisor.  The Board stated its satisfaction with the investment team’s experience and time spent monitoring the Fund’s investments. They noted that the Advisor also appears to have a strong compliance culture in place, led by an experienced Chief Compliance Officer, and also utilizes the services of a third party compliance consulting firm as needed.  The Trustees agreed that the Advisor has shown itself to be astute in its marketing efforts and that these efforts have benefited Fund shareholders. The Trustees also noted that the Advisor appears to understand and properly monitor the Fund’s key risks.  After further consideration of the services provided by the Advisor, in addition to the Trustees’ positive experience with the Advisor since the Fund’s inception, the Board concluded that the Advisor has and has the ability to continue to provide quality service to the Fund.


Performance.  The Trustees noted the Fund returned 0.24% for the one year period and 2.44% for the since inception (May 1, 2012) period and compared the Fund’s performance to its peer



PSG TACTICAL GROWTH FUND


ADDITIONAL INFORMATION (CONTINUED)

MARCH 31, 2015 (UNAUDITED)



group and Morningstar category averages, and to its benchmark, the HFRX Absolute Return Index (“HFRX”).  They noted the Fund underperformed each of the peer group and Morningstar Conservative Allocation category averages, in addition to slightly underperforming the HFRX for the one year period.  The Board noted positively, however, that the Fund outperformed HFRX and peer group for its since inception period. The Trustees considered the Advisor’s representation that the Morningstar category does not generally align with the Fund’s strategy as the category funds do not utilize all of the investment strategies used by the Fund.  The Trustees also reflected on the Advisor’s explanation that the Fund’s underperformance during the past one year period was the result of short term volatility in energy and international sectors that will, in the Advisor’s opinion, eventually correct.  The Board noted its satisfaction in the Advisor’s remedial changes to the strategy.  The Trustees reflected on the fact that  that the long term performance of the Fund was in line with or ahead of its benchmarks and agreed that the Fund’s performance was acceptable.  


Fees and Expenses.  The Trustees noted the Advisor charges an annual advisory fee of 1.25%, which was higher than the peer group and Morningstar category averages.  They noted that although the Fund’s advisory fee is higher than its benchmarks, it is within the range of fees charged by peer group funds (0.40% - 1.26%) and Morningstar category funds (0.00% - 1.77%).  They observed that the Fund’s total expense ratio was within the range of both the peer group and Morningstar category. The Trustees considered the fact that the Advisor utilizes more strategies in managing the Fund as compared to the funds in the Morningstar category, and that the Fund has a smaller asset base relative to the funds in the category which may enable the larger funds to achieve some economies of scale and a reduction of fees. After further discussion, and in consideration of the additional time and resources necessary to execute the Fund’s strategy, the Board concluded that the management fee was not unreasonable.  


Profitability. The Trustees reviewed the profitability analysis provided by the Advisor.  They noted the Advisor realized a profit in connection with its relationship with the Fund during the previous year.  The Trustees considered that the Advisor invested significant capital in connection with the launch of the Fund, and waived a portion of its fees during the initial years following the Fund’s launch.  They noted the Advisor has contractually agreed to continue to waive its fees to the extent necessary to limit Fund fees and expenses.  After further discussion, the Trustees concluded the Advisor’s profitability was not excessive.  


Economies of Scale.  The Trustees considered whether economies of scale had been realized with respect to the management of the Fund.  They noted that the Fund’s AUM had increased moderately during the year, but had not yet reached scalable levels.  The Trustees further noted the Advisor’s projected AUM for the Fund and the Advisor’s representation that it would consider breakpoints in the future as the Fund’s assets grow.  After discussion, it was the consensus of the Trustees that based on the current size of the Fund, breakpoints were not appropriate at this time.  The Trustees agreed to continue to monitor and revisit the matter as the Fund continues to grow.  


Conclusion.  Having requested and received such information from the Advisor as the Board believed to be reasonably necessary to evaluate the terms of the Management Agreement, and as assisted by the advice of counsel, the Board concluded that the advisory fee structure is reasonable and that renewal of the Management Agreement is in the best interests of the Trust and shareholders of the Fund.  

PSG CAPITAL MANAGEMENT TRUST (THE "TRUST")

Rev. January 2012


FACTS

WHAT DOES THE TRUST DO WITH YOUR PERSONAL INFORMATION?


Why?

Financial companies choose how they share your personal information.  Federal law gives consumers the right to limit some, but not all sharing.  Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.


What?

The types of personal information we collect and share depends on the product or service that you have with us. This information can include:


·

Social Security number and wire transfer instructions

·

account transactions and transaction history

·

investment experience and purchase history


When you are no longer our customer, we continue to share your information as described in this notice.


How?

All financial companies need to share customers’ personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons the Trust chooses to share; and whether you can limit this sharing.


Reasons we can share your personal information:

Does the Trust share information?

Can you limit this sharing?

For our everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus.

YES

NO

For our marketing purposes - to offer our products and services to you.

NO

We don’t share

For joint marketing with other financial companies.

NO

We don’t share

For our affiliates’ everyday business purposes - information about your transactions and records.

NO

We don’t share

For our affiliates’ everyday business purposes - information about your credit worthiness.

NO

We don’t share

For our affiliates to market to you

NO

We don’t share

For non-affiliates to market to you

NO

We don’t share

QUESTIONS?  

Call 1-855-866-9825.


PSG TACTICAL GROWTH FUND


PRIVACY NOTICE (CONTINUED)

MARCH 31, 2015 (UNAUDITED)





Page 2

 


What we do:


How does the Trust  protect my personal information?

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law.  These measures include computer safeguards and secured files and buildings.


Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.


How does the Trust collect my personal information?

We collect your personal information, for example, when you


·

open an account or deposit money

·

direct us to buy securities or direct us to sell your securities

·

seek advice about your investments


We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.


Why cant I limit all sharing?

Federal law gives you the right to limit only:


·

sharing for affiliates everyday business purposes information about your creditworthiness.

·

affiliates from using your information to market to you.

·

sharing for nonaffiliates to market to you.


State laws and individual companies may give you additional rights to limit sharing.


Definitions

Affiliates

Companies related by common ownership or control.  They can be financial and non-financial companies.


·

The Trust does not share with affiliates so they can market to you.

Non-affiliates

Companies not related by common ownership or control.  They can be financial and non-financial companies.


·

The Trust does not share with non-affiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies

that together market financial products or services to you.


·

The Trust does not jointly market.

  









INVESTMENT ADVISOR

PSG Investment Advisors, LLC

8161 Maple Lawn Blvd., Suite 400

Maple Lawn, MD 20759

 


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BBD, LLP

1835 Market Street, 26th Floor

Philadelphia, PA 19103

 


LEGAL COUNSEL

Thompson Hine LLP

41 South High Street, Suite 1700

Columbus, OH  43215

 


CUSTODIAN

Huntington National Bank

7 Easton Oval

Columbus, OH 43219

 


TRANSFER AGENT AND FUND ACCOUNTANT

Mutual Shareholder Services   

8000 Town Centre Drive, Suite 400

Broadview Heights, OH 44147

 


DISTRIBUTOR

Arbor Court Capital, LLC

2000 Auburn Drive, Suite 120

Cleveland, OH 44122





This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.





Item 2. Code of Ethics.


(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.


(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:


(1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3) Compliance with applicable governmental laws, rules, and regulations;

(4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5) Accountability for adherence to the code.


(c) Amendments:  During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.


(d) Waivers:  During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.


(e) The Code of Ethics is not posted on registrant’s website.


(f) A copy of the Code of Ethics is attached as an exhibit.


Item 3. Audit Committee Financial Expert.


(a) The registrant’s Board of Trustees has determined that it does not have an audit committee financial expert serving on its audit committee.  At this time, the registrant believes that the experience provided by each member of the audit committee together offer the registrant adequate oversight for the registrant’s level of financial complexity.


Item 4. Principal Accountant Fees and Services.


(a)

Audit Fees


FY 2015

$ 13,750

FY 2014

$ 13,500


(b)

Audit-Related Fees


Registrant


FY 2015

$ 0

FY 2014

$ 0



Nature of the fees:

Not applicable.


(c)

Tax Fees


Registrant


FY 2015

$ 2,000

FY 2014

$ 2,000



Nature of the fees:

Tax preparation and filing.


(d)

All Other Fees


Registrant


FY 2015

$ 0

FY 2014

$ 0


Nature of the fees:

Not applicable.


(e)

(1)

Audit Committee’s Pre-Approval Policies


The audit committee approves all audit and non-audit related services and, therefore, has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.


(2)

Percentages of Services Approved by the Audit Committee


None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.    


(f)

During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.


(g)

The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:


Registrant


FY 2015

$ 2,000

FY 2014

$ 2,000




(h)

The registrant's audit committee has not considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.



Item 5. Audit Committee of Listed Companies.  Not applicable.


Item 6.  Schedule of Investments.  Not applicable – schedule filed with Item 1.


Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.  Not applicable.


Item 8.  Portfolio Managers of Closed-End Funds.  Not applicable.


Item 9.  Purchases of Equity Securities by Closed-End Funds.  Not applicable.


Item 10. Submission of Matters to a Vote of Security Holders.

The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

Item 11.  Controls and Procedures.  


(a)

Disclosure Controls & Procedures.  Principal executive and financial officers have concluded that Registrant’s disclosure controls & procedures are effective based on their evaluation as of a date within 90 days of the filing date of this report.


(b)

Internal Controls.  There were no significant changes in Registrant’s internal controls of in other factors that could significantly effect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


Item 12.  Exhibits.  


(a)(1)

EX-99.CODE ETH.  Filed herewith.


(a)(2)

EX-99.CERT.  Filed herewith.


(a)(3)

Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable.


(b)

EX-99.906CERT.  Filed herewith.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


PSG CAPITAL MANAGEMENT TRUST



By:

/s/ Robert H. Carson

Robert H. Carson

Trustee, President and Principal Executive Officer


Date: June 4, 2015


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:

/s/ Jonathan V. Giordani

Jonathan V. Giordani

Trustee, Treasurer and Principal Financial Officer


Date: June 4, 2015